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United Power urging other Tri-State members to consider move toward partial contracts with wholesaler

Brighton-based United also losing out on nearly half of expected savings from new battery project due to new Tri-State policy

By Sam Lounsberry

Staff Writer

Posted:
01/02/2019 06:40:36 PM MST

Updated:
01/02/2019 09:54:39 PM MST

Trent Varley, of Interconnection Systems, works at United Power's then future site in Frederick in October. United Power is asking for more flexibility in the rules governing how it buys its power after a new regulation from Tri-State Generation and Transmission is nearly halving expected savings from its new battery project. (Lewis Geyer / Staff Photographer)

An electricity cooperative powering more than 200,000 homes and businesses in a 900-square-mile area that includes parts of Erie, Broomfield and the four-town Carbon Valley area is pleading with its fellow utilities under a wholesale power provider to change policies.

James Vigesaa, board chairman of Brighton-based United Power, wrote Nov. 27 to the 42 other electric cooperatives across Colorado, New Mexico, Wyoming and Nebraska that also purchase wholesale power from Westminster-based Tri-State Generation and Transmission, urging to start talks that would allow cooperatives more flexibility in buying energy.

Currently, Tri-State's member cooperatives — United Power is the largest — are required to purchase all of their wholesale power from Tri-State, and can only generate 5 percent of their total energy load on their own, a cap United has already hit. That limits how much renewable energy can surge onto their grids.

'A serious problem'

United has proposed changing that by decreasing the total percentage of its energy it must buy from Tri-State, which would let the cooperatives receiving their power from Tri-State either generate more of their own, or explore doing deals with other providers that could transmit more electricity generated from renewable sources, both of which could make their portfolios greener.

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Vigesaa in his letter wrote it is "a serious problem" that United competitor Xcel Energy's wholesale combined demand charge and energy charge is 28.5 percent lower than Tri-State's annually.

But United also learned this year that annual savings from its project to bring the state's largest lithium ion storage battery online with a Tesla system will only amount to just less than half of the nearly $1 million that was expected due to a Tri-State policy approved in June, according to United CEO John Parker.

That policy involves billing United for transmission costs during peak demand periods, when United plans on distributing energy captured during non-peak times by the battery to satisfy some of its demand for several hours. Generation demand charges will be offset for United when the battery is running, though, Boughey said.

"Those recommendations and the board's action is in line with industry standards, the approach that the Western Area Power Administration takes with their transmission tariff and the Federal Energy Regulatory Commission. It aligns with the industry very closely," Boughey said.

But Parker contends the new Tesla battery storage system — which became operational late last year in a facility just east of Longmont — is a distribution asset, not a transmission one, because it delivers electricity directly to the consumer.

Parker suggested that Tri-State leaders could be worried about using policies that provide too much benefit to batteries in case their use becomes widespread enough to decrease its peak transmission demand revenue substantially. He explained that with a more rewarding rule for batteries, peak demand transmission charges could be erased if that demand can be satisfied by energy collected by storage systems during non-peak times.

Transmission charges must remain for battery systems powered by Tri-State generation because federal rules and Tri-State's transmission providers mandate wholesale providers have enough power on hand to supply their customers with their entire load demand, Boughey said.

"Tri-State, as well as our transmission providers, apply transmission demand based on actual load. This ensures the costs of transmission to serve load are recovered," he said, essentially meaning there has to be a backup for the United battery's entire capacity ready to hit the grid.

"Cooperatives are now less able to take advantage of the cost savings that battery storage could provide to them, even those that are nowhere near the 5 percent (self-generation) limit," said Joe Smyth, a ratepayer to Tri-State member Mountain Parks Electric cooperative in Grand County who has reported extensively through his blog Clean Cooperative on how Tri-State's policies have affected United Power's battery project, as well as prospective projects for the rest of Tri-State's members.

Forced to choose

Another Tri-State policy impacting member cooperatives who are near its 5 percent self-generation cap is the categorization of battery systems like United's as generation assets.

That means those batteries count toward a cooperative's self-generation limit, despite not producing electricity on their own. Batteries only store energy from other sources.

Boughey said that policy, too, is standard in the utility industry, but Smyth noted it is forcing cooperatives that are approaching the 5 percent limit to choose between experimenting with battery storage and developing more local renewable energy sources for their portfolios.

"The issue we have is they are treating batteries like generators," Parker said. "We think a battery is a battery, and words have meaning."

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